Tuesday, November 17, 2009

Maxis relisting tomorrow

AFTER all the rumours and speculation, Maxis Bhd, the country's largest mobile operator, will be listed on the local bourse tomorrow (Thursday, November 19).

For over six months, Maxis has been linked with various rumours, including:

1. Maxis-Astro merger (though some believe it is still possible)
2. to merge its Indian operations with Astro's Indian operations.

Speculation intensified when PM, upon returning from Middle East in July, had suggested that Maxis should consider relisting, as it would enhance the local bourse's attractiveness. Maxis responded with "we will consider relisting" type of statement.

All speculation was put to rest when in September, when a Maxis draft prospectus was out on Securities Commission's website. Followed by the prospectus launch end October.

Anyway, below are some of the key information on the IPO:

1. The IPO, to raise more than RM11 billion, will be the biggest in Southeast Asia. At RM11 billion (approx US$3.3 billion), it is larger than the US$1.5 billion IPO by SingTel, US$1.7 billion IPO by PT Telekomunikasi Indonesia, US$1.3 billion IPO by PT Adaro Energy and the US$1.2 billion IPO by PT Indonesia Satellite.

2. Maxis Bhd plans to borrow RM5 billion to repay loan to its parents, Maxis Communications Bhd. (Maxis Communications, post listing, will own 70 per cent of Maxis Bhd)

3. It has got a revolving credit facility of RM1 billion from CIMB Bank Bhd.

4. Although 90 per cent of the 2.25 billion shares were allocated to institutional investors, several funds were unhappy with the allocation they received. Some funds were getting as low as 5 per cent of allocation. (meaning, if the fund apply for 50 million shares at RM5.00, only 2.5 million shares were allocated to the fund) Nevertheless, spoke to some fund managers working for insurance firm, it appeared that they receive bigger allocation.

In fact, in a report by The Edge Financial Daily, OSK Investment Bank appeared to have declined the 1.5 million shares that were allocated to them.

5. The IPO is expected to solve/ part solve Maxis Communications Bhd's funding needs for its Indian operation. It owns about 74 per cent stake in Aircel, which is currently the 6th-9th biggest player in India.

6. For long-term investors, they will be delighted to know that the company has a policy of returning at least 75 per cent of net profit to shareholders.

From my lunch sessions with various analysts, it appears that analysts are expecting the company to return 80-over percent of net profits as dividend. Some analysts wont be surprised if the company returns MORE THAN 100 per cent of net profits to shareholders. This means, the company may return all its nets profits, plus surplus cash, to shareholders as dividend. Of course, all these are mere speculations.

There will be a few more Maxis related posting over the next few days. Sorry for the one-month MIA, will once again, try to update more regularly from now on.


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